The U.S. Social Security system has helped keep many retirees out of poverty. However, according to the Social Security and Medicare Trustees, Social Security faces a future financial shortfall of $10.4 trillion in present value. This enormous imbalance has received little attention in public debates about Social Security. Instead, the media and policymakers continue to focus on the program’s trust fund and several other ad-hoc measures that create a misleading impression of the size of Social Security’s financial problem. Although the Social Security Trust Fund is not projected to be exhausted until 2042, Social Security’s $10.4 trillion present value imbalance is accruing interest and will grow by $600 billion during 2004 alone. The current cash-flow federal budget, however, is biased against reforms that would improve Social Security’s finances. As shown herein, a new federal accounting system would remove this bias.
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Paper provided by University of Michigan, Michigan Retirement Research Center in its series Working Papers with number
wp093.
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Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
Laurence J. Kotlikoff, 2006.
"Is the United States bankrupt?,"
Review,
Federal Reserve Bank of St. Louis, issue Jul, pages 235-250.
[Downloadable!]
William R. Emmons & Anthony Pennington-Cross, 2006.
"Editor's introduction,"
Review,
Federal Reserve Bank of St. Louis, issue Jul, pages 221-234.
[Downloadable!]